Companies more optimistic, but Covid and Brexit still a challenge

More than a third of German-British businesses now plan to increase their investment in the UK over the medium term, a significant turnaround from six months ago.

German-British Chamber of Commerce’s new Spring Survey shows that 35% of such firms now think they will raise investment, up from just 5% in the autumn while only 10% plan to decrease their investment, down from 20%.

The cross-border group now believes there is light at the end of the Covid-19 tunnel with this forecasted change, but with it being mere sentiment, the chief executive of the German-British Chamber of Commerce warned that Brexit would still be a “critical issue” for businesses.

A total of 44% of companies currently view their own operations in the UK as performing positively or very positively, with 38% classed as stable.

Meanwhile 52% also expect the UK economy to perform better or significantly better over the coming 12 months (22% expect a stable development in the UK).

However, companies think that a full recovery from the Coronavirus pandemic for the UK economy is still some way off. The majority expects a full recovery to take at least another 18 months.

In line with the planned increase in investment plans, 44% of companies expect to hire new employees – again a substantial improvement on last autumn when only 11% planned to do so.

Nevertheless, Brexit and Covid are still having a significant effect on a majority of companies as trade barriers/customs formalities and travel restrictions continue to be the top two challenges for businesses.

In terms of the future structure of supply chains, the Brexit-related trade barriers also appear to have a very significant (and much larger than Covid-19) effect on future sourcing decisions. However, many plans to relocate some operations/business activities have been shelved. Now only 20% (versus 70% last autumn) have plans to do so.

Dr Ulrich Hoppe, Director General of the German-British Chamber of Industry & Commerce, commented: “The survey results suggest that, despite the current challenges of Covid-19 and Brexit, the sentiment in the German-British business community is much more upbeat than six or twelve months ago.

“However, the effect of Brexit on the future structure of supply chains should not be underestimated, as trade barriers/customs formalities and extra costs remain a critical issue for many businesses.”

A total of 117 online interviews were conducted with members of the German-British business community that have UK operations. The study was part of the World Business Outlook survey of the Association of German Chambers of Industry & Commerce. Fieldwork was conducted from 25 March to 9 April 2021. The full results can be found here.

* Cumbria Chamber’s Covid toolkit is updated regularly with the latest information on grants, loans, Covid restrictions and safe working. Keep checking it for the latest information.

** Cumbria Chamber’s Business Beyond Brexit toolkit has all the information you need about trade post-Brexit. There’s also information on travel and transport, legal and IP issues arising from Brexit, sector guides, the implications for recruiting and retaining staff, plus podcasts, webinars and videos. You can  find information there on the Brexit Support Fund, which is available until 30th June and offers grants of up to £2,000 to SMEs pay for support on importing and exporting ahead of import controls coming into force from April and July, and on the Field Force Support Programme for businesses that trade more than £250,000 of goods with the EU each year.

© Cumbria Chamber of Commerce